The
Illinois Attorney General's Office has stepped in to force the multi-million
dollar suburban Arthur Foundation to abide by its original ground rules
governing how it dispenses funds and to force the foundation to set term limits
for its directors.

An
agreed order was inked June 22 in Cook County Circuit Court between Illinois
Attorney General Lisa Madigan’s office and the Riverside-based foundation, prohibiting
the foundation from providing grants outside certain areas in Cook County and
limiting the board of directors to 10-year terms.

IL Attorney Gen. Lisa Madigan

MacNeal Memorial Hospital
Association ran the not-for-profit MacNeal Hospital in Berwyn for a number of
years until 1999, when it sold its assets to two for-profit corporations,
Vanguard Health Services and VHS of Illinois. According to law, the proceeds
from the sale were to be used for a charitable purpose as similar to that of
running a non-profit hospital as possible.

In
line with this, the MacNeal Health Foundation was incorporated in 1999 to see
that the proceeds were used for "charitable, educational and scientific
purposes and specifically, to improve and promote health in the Chicago
metropolitan area." In particular, the money was to address health needs
within a 10-mile radius of the former MacNeal Hospital. Besides Berwyn, this
radius would take in the communities of Cicero, Riverside, North Riverside, La
Grange, Brookfield and others in central and western Cook County.

Parties
involved with the sale of the hospital also stated this would be the
foundation’s aim during a public hearing conducted in 1999 in connection with
the establishment of the foundation, according to the Attorney General’s
office.

The
foundation has funded scholarships, medical programs and clinics. According to
the foundation, it extended $101.8 million in grants between 2000 and 2015.

The
foundation’s original bylaws also established a seven-member board of
directors, with none of the directors to serve more than three consecutive
three-year terms. This stipulation was also made at the 1999 hearing, the
Attorney General said.

In
2006, the foundation changed its name to the Arthur Foundation. Also that year,
the foundation changed its charter, eliminating the specification that
restricted the use of funds to within the 10-mile radius; with the change,
there was no longer any geographic confines.

The foundation also deleted the
provision limiting terms of service for the board.

Citing
the Illinois Charitable Trust Act, the Attorney General initiated action this
spring, saying the foundation has to adhere to the original articles of
incorporation and bylaws, based on the principle of equity and the
representations made at the 1999 hearing to abide by the donor’s wishes. The
Attorney General added that the foundation did not file the new article of
incorporation with the Illinois Secretary of State, as required.

The
Attorney General further pointed out all directors had been on the board more
than 10 years, and so were allegedly in violation of the bylaws and must
resign.

The
foundation differed, contending the changes were legal.

Nonetheless,
the directors agreed to step down in late May, with the understanding that
future directors will follow the original charter governing the 10-mile radius
and will serve on the board no more than 10 years. Also, any future proposed
changes to the charter and bylaws have to first gain a judge’s approval and the
Attorney General’s acknowledgment. For its part, the Attorney General’s office
agreed to not challenge any grants already handed out by the foundation.

Cook
County Judge Diane Larsen oversaw the agreement.

Assistant
Attorney General Therese Harris represented the state. The Milwaukee-based
nationwide firm of Quarles & Brady, which has a Chicago office, represented
the foundation.